What Affects Your Credit Score in Canada?
The 5 Factors That Actually Matter
Understanding the big ones — because these are where your score is won or lost.
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Updated Feb 18, 2026 7:55 p.m. MST · 9 min read
Written by the Capital Corner Editorial Team
You Don't Need to Have It All Figured Out
Nobody grows up excited to learn about credit scores. It's not exactly the kind of thing that comes up at dinner, and most of us weren't taught it in school.
So, when you suddenly need to know — like when you're applying for an apartment, a car loan, or your first credit card — it can feel a bit overwhelming. Most people are figuring this out as they go.
And here’s the part no one tells you. It can save you money — or cost you money — long before you even realize it matters.
Your credit score quietly follows you.
Your score is built from several factors — each carrying a different weight. Master these, and you're already ahead of most people.
Think of it like a school report card. Each subject is weighted differently. A strong mark in the major subjects lifts your overall average.
A weak one in a minor subject? Barely a dent. Your credit score works the same way.
So, what are these 5 illustrious factors:
1. Payment History (35% of Your Credit Score in Canada)
This one factor makes up more than a third of your entire score. That’s huge.
What it is looking for is simple: when you owe money, do you pay it back on time?
Think of it like showing up to work on time. Do it consistently, and nobody makes a big deal of it — it's just expected. Come in late or miss a shift without calling? That gets noticed. Miss a few? It starts to define how people see your reliability.
One late payment won't ruin your score forever. But when you’re just starting out, the impact can fill bigger. It will leave a mark — and it takes months and months of consistent on-time behavior to rebuild trust.
A single payment that's 30 days late can drop your score by 50–100 points. Ouch!!
Tip: Set up automatic payments — even just for the minimum amount. You can always pay more later, but the autopay makes sure you never accidentally miss a due date while life is busy.
2. Credit Utilization (30% of Your Credit Score in Canada)
Credit utilization is how much of your available credit you're using at any given time. It's the second biggest factor — and one of the fastest ones to improve. Why fast? Because unlike payment history, which builds slowly over months, you can change your utilization almost immediately. Pay down your credit card balance today, and your score will improve.
Here's an easy way to picture what utilization actually means:
Think of your credit limit like a full tank of gas. If you burn through almost all of it every month, you're basically running on fumes. You wonder if you will have enough gas to get to Grandma’s house before you run out — yikes!
Lenders look at it the same way. If you have used up (or utilized) all your credit, they see you as financially running on fumes. You are one unexpected expense away from having an empty tank and being stuck in the middle of the road.
What if you only use a quarter of the tank? That signals you've got room — you're not desperate, and you're not running on fumes.
So how full should your tank stay? The general rule is to keep your credit card (and other revolving lines of credit) balance under 30% of your limit at all times. If your credit card limit is $1,000, try to keep your balance under $300.
That's the sweet spot. Under 10%? Even better.
Here's the sneaky part: Even if you pay your balance off in full every month, your score can still take a hit. Why?
Because your utilization is measured at the date your statement closes — not the day you pay it. So, if your limit is $1,000 and your statement closes with an $800 balance on it, the credit bureaus see 80% utilization. The fact that you paid it off a week later doesn't change that.
Tip: If you use your card a lot, try making a mid-month payment before your statement closes. It's a small habit that can make a noticeable difference to your score.
3. Length of Credit History (15% of Your Credit Score in Canada)
This one rewards patience — which isn't always easy to hear when you're just starting out. The longer your accounts have been open, the more information there is to look at.
A ten-year track record of responsible credit use is more reassuring to a lender than a ten-month one. Makes sense, right?
The part that trips people up: closing old accounts. It feels like tidying up.
But closing a card you've had for five years shortens your average credit age — and that can pull your score down.
For example: You have two credit cards. One you've had for 6 years, and one for 1 year. Add those together (6 + 1 = 7 years), divide by two cards, and your average credit age is 3.5 years. Close the old one, and suddenly the math changes completely — now you only have one card that's 1 year old.
That's a meaningful drop.
Tip: Keep your oldest card open, even if you barely use it. Make one small purchase on it every few months — a coffee, a streaming subscription — that keeps it active without any real effort or cost.
4. Types of Credit Used (10% of Your Credit Score in Canada)
This one is less about action and more about awareness.
Credit comes in two main flavours:
Revolving credit: credit cards and lines of credit — accounts where your balance goes up and down and you can borrow again after paying.
Installment credit: car loans, student loans, mortgages — a fixed amount you borrow once and pay back in regular chunks.
Having both types on your record shows lenders you can manage different kinds of financial commitments. It adds texture to your credit profile.
That said — this is a 10% factor.
It's a nice bonus, not a must-have.
Important: Don't take on debt just to diversify your credit mix. Taking out a loan, you don't need to improve a factor worth 10% is not a trade-off worth making.
5. Recent Credit Applications (Hard Inquiries) (10% of Your Credit Score in Canada)
Every time you apply for new credit — a card, a loan, or a line of credit — the lender does a "hard inquiry" on your report. This is them looking at your full credit information to help them make a yes-or-no decision.
One or two hard inquiries? Barely a blip. A bunch of them in a short period?
That starts to look like you're scrambling for credit — and that makes lenders nervous. You may see credit offers everywhere — pre-approved emails, checkout discounts, store cards, even that Home Depot card at the counter. They can all sound good, but you don’t have to take them.
Just so you know you can Check your own score as often as you want — it never counts as a hard inquiry. Knowing your number is always a good idea.
Tip: Only apply for new credit when you actually need it.
Bottom Line
Your credit score isn't a mystery — it's just math.
The two biggest factors, paying bills on time and not maxing out your cards, make up about 65% of your score. If you only focus on these two habits — you’re already doing the most important work, and you are starting to build the foundation
The other three?
Good to know, but they'll mostly take care of themselves as you build good habits.
Get Started Today
☐ Set up automatic payments on your credit card — even just the minimum
☐ Check your credit card balance — are you over 30% of your limit?
☐ Find your oldest credit card and make sure it's still open
☐ Check your credit score
☐ If your balance is high, make one small payment today — even $50 lowers your utilization
Frequently Asked Questions
What lowers your credit score the most in Canada?
Late or missed payments usually have the biggest impact. Payment history makes up the largest part of your score. Even one missed payment can cause a noticeable drop. If you’re trying to build safely from the start, read: The Beginner’s Credit-Building Strategy.
How much does credit utilization affect your score in Canada?
Credit utilization — how much of your limit you use — is the second biggest factor. Keeping your balance under 30% of your limit (and ideally under 10%) helps protect your score. If you’re unsure how this fits into the bigger picture, read: Credit Scores vs. Credit History — What’s the Difference?
How long do late payments stay on your credit report in Canada?
Late payments can stay on your credit report for several years. That’s why consistency matters more than quick fixes. If you’re worried about past mistakes, read: Common Credit Mistakes That Hurt Your Score.
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